Life Insurance

About Endowment Life Insurance

Endowment life insurance is a type of life insurance policy in which a lump sum is paid at the end of the policy term or in the event of death of the policy holder. The amount of premium to be paid is large and can be paid as a lump sum or in regular intervals. These amounts are invested in many investment portfolios in order to build up cash value in the policy.

There are many types of endowment policy schemes. Here is a brief look into each of these:

Traditional With Profits Endowments – The policy holder is paid a lump sum after a specified number of years. Other additional payments include bonuses from investments and these include regular bonuses and non-guaranteed bonuses.

Unit-linked endowment – The premiums paid by the policy holder is divided into units which are then invested into unitized insurance funds.

Full endowments – Here the policy holder receives accumulated profits when the payment has to be made at the time of policy expiry or in the event of death. The amount received is larger.

Low cost endowment – As the name suggests, this is a low cost endowment policy and a minimum lump sum payment is required for a minimal death payment to beneficiaries on death of the policy holder.

Traded endowment – This is a traditional endowment policy with profit sold off to a new person during the tenure of the policy term. The person buying it can be charged more than what the policy will pay as death benefits.

Before you sign up the endowment policy, make sure to read up all terms and conditions of the policy so that you can make an informed decision. Look into how the policy will pay out and conditions under which claims can be made on it, before signing up.

Print | Bookmark